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Annual accounts notification 2015

03/02/2016

International growth and local investment give record results for the Danish Agro group.

Achieving record profit meant that 2015 was a highly successful year for the Danish Agro group. Many of our activities succeeded that will help create the best possible conditions for increased growth in value for farmers dealing with us now and moving forward.

The Danish Agro group realised pre-tax profits of EUR 81 million for 2015, the best result to date, and EUR 7 million higher than 2014, an improvement of 10%. Pre-tax profit gave a return on the group's equity at the beginning of the year of 19%.

Turnover in 2015 comprised EUR 3.8 billion, compared to EUR 3.2 billion in 2014, an increase of 18%. Growth is primarily the result of an increase in turnover by Ceravis, the German acquisition, consolidated within the last seven months of the year. After tax, Danish Agro realised a surplus of EUR 65 million, which increases the group's equity at the beginning of the year by 15%. Consolidated equity rose by EUR 130million from EUR 425 million to EUR 555 million. The group's solvency ratio is now 30%, corresponding to last year's level. The fact that the ratio has not increased is solely due to the acquisition of Ceravis AG, that helped increase the group's overall balance sheet totals.

Danish Agro's Group CEO, Christian Junker, is extremely satisfied with the year:

- Danish Agro took an active part in the continued consolidation of the international agribusiness sector in 2015, whilst achieving all the financial targets we had set. We are generally in a very solid financial position, making us an even better partner for the farmers we deal with moving forwards, says Christian Junker and continues:

- These are difficult times for many farmers and we are focusing strongly on creating value for them. We are focusing on specialisation and know-how to help them with the latest and best solutions. Our investments in German and Sweden during the year will also be a means by which we can continue to offer high quality products at competitive prices. It’s important for us to emphasise that growth for Danish Agro is not a goal in itself. It is the means by which we can maintain a healthy business in an industry under pressure, as size helps ensure buying power and better terms when dealing with suppliers. Our focus in 2016 will be on consolidation of the group's existing activities, says Junker.

Stronger international collaboration

2015 saw Danish Agro consolidate its position as one of the two biggest and most important agribusiness suppliers to the farming industry around the entire Baltic.

The German authorities approved Danish Agro’s acquisition of German agribusiness company Ceravis AG in May 2015. Since then, we have focused on integration of the German activities into the group. A further agreement was signed in August 2015 on Ceravis taking over three of German agribusiness group Agravis’ subsidiaries in northern Germany in August 2015. Ceravis is therefore even stronger now in northern and eastern Germany, and with turnover in the region of EUR 10 billion will be second biggest in that region.

We signed a deal in December 2015 for the acquisition of the biggest Swedish agribusiness company, Kalmar Lantmän. Kalmar will be the future head office and hub for the Danish Agro group's agribusiness activities in Sweden, where import of e.g. ingredients and fertiliser plus export of grain will be handled.

The Danish Agro group completed the acquisition of sole control over Hedegaard A/S and DLA Agro a.m.b.a in 2015. Danish Agro’s ownership of both had been subject to constraints on voting rights that meant that the group did not have control. Danish Agro’s objective with sole control was primarily with regards to compliance. Greater efficiency and exploitation of know-how and resources were also important goals that will benefit the group and our customers.

To create the best conditions for more growth of the group's machinery sales, they were split from our other agribusiness activities in 2015 to become a standalone business unit within the group called Agribusiness Machinery. The aim is to ensure better utilisation of synergies, sharing experience and coordination across companies and countries. Machinery sales turnover reached EUR 270 million in 2015.

Danish Agro's Chairman of the Board, Jørgen H. Mikkelsen, is very satisfied with the objectives the Danish Agro group achieved in 2015:

- The supervisory board of Danish Agro and I are highly satisfied with the way the group has managed to become an even stronger partner for our customers and owners in 2015. The agricultural industry is in a historically difficult situation, with many farmers in difficulties. That's something we take very seriously at Danish Agro, and why we maintain focus on how we can help increase value for individual farmers. It is therefore a great pleasure to see how we as farmers on a daily basis benefit from the growth and internationalisation of our group. We believe that we have found a healthy balance between international strength and local investment. That’s what creates value for farmers. High quality products at competitive prices have to go hand in hand with local insight and services, says Mikkelsen before adding:

- I am also delighted that we can once again reward our members in the form of dividends this year thanks to a good result. Being able to do so is goal in itself when the right economic circumstances are present, given that we are a cooperative,” he concludes.

Expectations for 2016

The group expects turnover of around EUR 4.7 billion in 2016, corresponding to growth of 22%. The group is aiming for pre-tax profit of between EUR 80 and 90 million after depreciation and amortisation of around EUR 67 million. The group's balance sheet is expected to show around EUR 2.1 billion. Equity will be increased to the level of EUR 620 – 630 million, corresponding to a solvency ratio of 30%.

The group will focus on integration of its new acquisitions in Germany and Sweden in 2016, deriving maximum synergy from its highly varied activities.